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Test your basic knowledge |
AP Microeconomics
Start Test
Study First
Subjects
:
economics
,
ap
Instructions:
Answer 50 questions in 15 minutes.
If you are not ready to take this test, you can
study here
.
Match each statement with the correct term.
Don't refresh. All questions and answers are randomly picked and ordered every time you load a test.
This is a study tool. The 3 wrong answers for each question are randomly chosen from answers to other questions. So, you might find at times the answers obvious, but you will see it re-enforces your understanding as you take the test each time.
1. The mechanism for combining production resources - with existing technology - into finished goods and services
Determinants of Labor Demand
Monopoly long-run equilibrium
Incidence of Tax
Production function
2. Ex -y = (%dQd good X) / (%d Price Y). If Ex -y > 0 - goods X and Y are substitutes. If Ex -y < 0 - goods X and Y are complementary
Total Welfare
Cross-Price Elasticity of Demand
Unit elastic demand
Consumer surplus
3. Occurs when an economy's production possibilities increase. This can be a result of more resources - better resources - or improvements in technology.
Price discrimination
Economic Growth
Constant cost industry
Spillover costs
4. Another way of saying that firms are earning zero economic profits or a fair rate of return on invested resources
Law of Supply
Consumer surplus
Normal Profit
Price Ceiling
5. The ability to set the price above the perfectly competitive level
Market power
Monopsonist
Allocative Efficiency
Price elasticity
6. A firm that has market power in the factor market (a wage-setter)
Short run
Marginal Cost (MC)
Consumer surplus
Monopsonist
7. AFC = TFC/Q
Spillover costs
Producer surplus
Average Variable Cost (AVC)
Average Fixed Cost (AFC)
8. Two goods are consumer complements if they provide more utility when consumed together than when consumed separately
Monopoly
Complementary Goods
Non-collusive oligopoly
Explicit costs
9. A good for which higher income decreases demand
Monopolistic competition
Inferior Goods
Monopsonist
Spillover costs
10. Occurs when there is no more incentive for firms to enter or exit. P=MR=MC=ATC and profit = 0
Perfectly competitive long-run equilibrium
Absolute Advantage
Relative Prices
Marginal tax rate
11. A measure of industry market power. Sum the market share of the four largest firms and a ratio above 40% is a good indicator of oligopoly
Four-firm concentration ratio
Spillover benefits
Luxury
Price Elasticity of Supply
12. The output where AVC is minimized. If the price falls below this point - the firm chooses to shut down or produce zero units in the short run
Producer surplus
Marginal Cost (MC)
Shutdown Point
Average Total Cost (ATC)
13. The firm hires the profit maximizing amount of a resource at the point where MRP = MRC
Break-even Point
Profit Maximizing Resource Employment
Subsidy
Monopsonist
14. Exists when the production of a good imposes disutility upon third parties not directly involved in the consumption or production of the good
Negative externality
Cross-Price Elasticity of Demand
Price floor
Income Elasticity
15. ATC = TC/Q = AFC + AVC
Non-collusive oligopoly
Market power
Scarcity
Average Total Cost (ATC)
16. The philosophy that a citizen should receive a share of economic resources proportional to the marginal revenue product of his or her productivity
Marginal Cost (MC)
Absolute Advantage
Marginal Productivity Theory
Substitute Goods
17. Total product divided by labor employed. APL = TPL/L
Marginal Benefit (MB)
Average Product of Labor (APL)
Specialization
Collusive oligopoly
18. Ei > 1
Luxury
Perfectly competitive long-run equilibrium
Implicit costs
Monopoly long-run equilibrium
19. The additional benefit received from the consumption of the next unit of a good or service
Shutdown Point
Production function
Marginal Benefit (MB)
Monopoly long-run equilibrium
20. The output where ATC is minimized and economic profit is zero
Cross-Price Elasticity of Demand
Monopsonist
Break-even Point
Excess Capacity
21. The least competitive market structure - characterized by a single producer - with no close substitutes - barriers to entry - and price making power
Dead Weight Loss
Substitution Effect
Oligopoly
Monopoly
22. The most desirable alternative given up as the result of a decision
Marginal Revenue Product (MRP)
Production function
Opportunity Cost
Increasing Cost Industry
23. The study of how people - firms - and societies use their scarce productive resources to best satisfy their unlimited material wants.
Cross-Price Elasticity of Demand
Perfectly elastic
Explicit costs
Economics
24. Holding all else equal - when the price of a good rises - consumers decrease their quantity demanded for that good
Increasing Cost Industry
Law of Demand
Economic Growth
Positive externality
25. For one good - constrained by prices and income - a consumer stops consuming a good when the price paid for the next unit is equal to the marginal benefit received
Unit elastic demand
Marginal Resource Cost (MRC)
Shutdown Point
Constrained Utility Maximization
26. TR = P * Qd
Non-collusive oligopoly
Total Revenue
Economics
Break-even Point
27. The additional cost incurred from the consumption of the next unit of a good or a service
Total Welfare
Spillover costs
Total Product of Labor (TPL)
Marginal Cost (MC)
28. Production of maximum output for a given level of technology and resources. All points on the PPF are productively efficient
Constant Returns to Scale
Average Fixed Cost (AFC)
Diseconomies of Scale
Productive Efficiency
29. Occurs when LRAC is constant over a variety of plant sizes
Constant Returns to Scale
Price inelastic demand
Economic Growth
Price Elasticity of Supply
30. The imbalance between limited productive resources and unlimited human wants
Natural Monopoly
Economic Growth
Unit elastic demand
Scarcity
31. AVC = TVC/Q
Long Run
Monopoly
Average Variable Cost (AVC)
Excess Capacity
32. MUx / Px = MUy/Py or MUx/MUy = Px/Py
Market power
Utility Maximizing Rule
Total Revenue
Consumer surplus
33. Entry of new firms shifts the cost curves for all firms downward
Monopolistic competition long-run equilibrium
Surplus
Decreasing Cost industry
Constrained Utility Maximization
34. Pm > MR = MC - which is not allocatively efficient and dead weight loss exists. Pm > ATC - which is not productively efficient. Profit > 0 so consumer surplus is transferred to the monopolist as profit
Monopoly long-run equilibrium
Derived Demand
Marginal tax rate
Substitution Effect
35. Ed > 1 - meaning consumers are price sensitive
Price elastic demand
Average Fixed Cost (AFC)
Absolute Advantage
Marginal Analysis
36. Production inputs that cannot be changed in the short run. Usually this is the plant size or capital
Fixed inputs
Surplus
Total Product of Labor (TPL)
Marginal Productivity Theory
37. A very diverse market structure characterized by a small number of interdependent large firms - producing a standardized or differentiated product in a market with a barrier to entry
Marginal Revenue Product (MRP)
Marginal Product of Labor (MPL)
Oligopoly
Short run
38. Additional benefits to society not captured by the market demand curve from the production of a good - result in a price that is too high and a market quantity that is too low. Resources are underallocated to the production of this good
Spillover benefits
Total Fixed Costs (TFC)
Productive Efficiency
Negative externality
39. Excess demand; a shortage exists at a market price when the quantity demanded exceeds the quantity supplied
Law of Demand
Shortage
Average Product of Labor (APL)
Natural Monopoly
40. Ed = (%dQd)/(%dP). Ignore negative sign
Marginal Productivity Theory
Price elasticity
Monopolistic competition
Productive Efficiency
41. The rate paid on the last dollar earned. This is found by taking the ratio of the change in taxes divided by the change in income
Marginal tax rate
Monopolistic competition
Total Welfare
Economic Growth
42. Holding all else equal - when the price of a good rises - suppliers increase their quantity supplied for that good
Total Product of Labor (TPL)
Law of Supply
Substitution Effect
Subsidy
43. Es = (%dQs) / (%dPrice)
Price Elasticity of Supply
Determinants of elasticity
Free-Rider Problem
Price discrimination
44. Goods that are both nonrival and nonexcludable. One person's consumption does not prevent another from also consuming that good and if it is provided to some - it is necessarily provided to all - even if they do not pay for that good
Consumer surplus
Public goods
Total Revenue Test
Marginal tax rate
45. The practice of selling essentially the same good to different groups of consumers at different prices
Spillover benefits
Price discrimination
Negative externality
Determinants of Labor Demand
46. The total quantity - or total output of a good produced at each quantity of labor employed
Total Product of Labor (TPL)
Relative Prices
Spillover costs
Profit Maximizing Rule
47. The proportion of the tax paid by the consumers in the form of a higher price for the taxed good is greater if demand for the good is inelastic and supply is elastic
Diseconomies of Scale
Increasing Cost Industry
Profit Maximizing Resource Employment
Incidence of Tax
48. Factors of production - 4 categories: labor - physical capital - land/natural resources - and entrepreneurial ability
Absolute Advantage
Resources
Inferior Goods
Luxury
49. Measures the cost the firm incurs from using an additional unit of input. In a perfectly competitive labor market - MRC = Wage. In a monopsony labor market - the MRC > Wage
Scarcity
Break-even Point
Marginal Resource Cost (MRC)
Law of Increasing Costs
50. Exists if a producer can produce a good at lower opportunity cost than all other producers
Perfectly inelastic
Utility Maximizing Rule
Comparative Advantage
Total Revenue